Hmmm... you are really opening a can of worm here...
Luxury is by definition; something that is not considered essential.
Where to set the line is the tricky part.
For example. Having clean supply of running water can be considered a luxury,
For a brand to be synonymous with luxury. They must have achieved a certain reputation or perceived superiority (whether true or not); then they generally can sell at higher price. When one has reached a certain point; they will acquire a certain mystique around them.
It is important to note that Marketing can have a lot of influence on people perception. (Eg. Pet Rock).
Also I can't remember the name of this guy... I think Mr. Brainwash or something. Anyway, this guy set up this art exhibition on grand scale with a lot of hype. He is a nobody pretty much, and ripped off painting of other artist, basically not much art value, but he pretty much cleaned out! Because of all the fuss he is able to gather, people thought he was somebody, and not knowing much; people thought his work is a masterpiece, and fetch a ridiculous price. Iirc that's the story...
So yeah... Marketing can mess with your head. So be careful, and question often, am I being fooled? Do I want to support these practices (vote with your dollar)?
I'm not sure if people associate working condition with luxury. Most people now associate more with country of origin as a sign of luxury instead.
Personally, having proper working condition/pay is important I think (especially in luxury goods, as their margin are high). On that note, we should also keep in mind how the animal are treated to provide the hide. How the cotton is made? Is it GMO free? Is it organic? Do they use pesticide? Then there is something like silk worm and precious stone/metal and stuff so yeah, the list goes on.
hopefully more and more people are aware of how things are made. Then we are able to question, and hopefully move away from capitalist/consumerist/disposable society we are heading now. I'm sick of having things that are not made properly anymore.
Now to address the question why buy luxury brand?
I put design and originality high on the list. Followed closely by quality. You usually go to brand or people renown or having reputation for producing quality product (or match the value you are looking for in a product) because how else would you know? it also assures you that you made the right choice... Or not...